A federal judge ruled Tuesday that the National Nuclear Security Administration (NNSA) must return some $20 million in fees its clawed back in 2016 from the prime contractor on the unfinished, over-budget Mixed Oxide Fuel Fabrication Facility (MFFF).
In a series of filings since consolidated in the U.S. Court of Federal Claims, CB&I AREVA MOX Services sued the NNSA in 2016, seeking some $200 million in fees and damages for the Energy Department agency’s alleged mismanagement of the project.
Last year, in a motion for summary judgment, MOX Services asked Judge Thomas Wheeler to grant a quick partial award of roughly $20 million in the case: fees the company said the NNSA improperly clawed back in 2016. Wheeler on Tuesday ordered the agency to return the money, essentially accepting the contractor’s argument that the NNSA could not make a decision on fee awards until MFFF was complete.
“Regardless of which party is responsible for the increased costs and schedule delays, none of the contract provisions permits the NNSA to claw back provisional incentive fees before the completion of the MFFF,” Wheeler wrote.
The NNSA had argued it could reclaim the fees after the end of the contract’s first option period, which lapsed in 2016.
Wheeler blasted NNSA for that interpretation of the contract and said the agency’s decision to claw back the fees was “baseless retaliation” against MOX Services for a separate fee claim the company made in 2016.
The partial award ordered Tuesday is not the end of the case. MOX Services and the NNSA are set to take the matter to trial in 2019.
The MFFF was designed to turn 34 metric tons of surplus weapon-usable plutonium into commercial reactor fuel under an arms-control pact with Russia. The facility, put under contract in 1999 and under construction since 2007, was supposed to be finished in 2016 and cost around $5 billion. Now, MOX Services estimates it will take at least until 2029 to finish MFFF and cost about another $5 billion.
Wheeler’s Tuesday order was the second legal setback in a week for NNSA’s effort to close MFFF. On Thursday, in a separate lawsuit filed by the state of South Carolina in the District Court for South Carolina, Judge J. Michelle Childs handed down a preliminary injunction that prevents NNSA from closing MFFF until the state’s lawsuit plays out in the district court.
The NNSA wants to turn the MFFF into a facility to produce fissile nuclear-warhead cores called plutonium pits.
The Donald Trump administration, in the Nuclear Posture Review it published in February, said NNSA should make at least 80 pits a year by 2030. NNSA wants to produce the pits in a 50/30 split between the converted MFFF and upgraded pit facilities at Los Alamos National Laboratory.
Legislation pending before the U.S. Senate would prohibit NNSA from closing MFFF until at least 2020.
